Transportation budget proposal draws criticism

The Legislature's budget-writing committee on Wednesday approved $350 million in borrowing for roads. 

The taxes and fees associated with buying a new vehicle in Wisconsin would jump ahead of neighboring states under a state Department of Transportation plan.

On a $32,000 new vehicle purchase, the agency estimates the state would collect $2,544.50 in taxes and fees (excluding county or local sales taxes), up $800 because of a proposed 2.5 percent tax on the sticker price of all new vehicles.

The department is calling the new tax a “highway user fee.”

In neighboring states, the taxes and fees on the same-priced vehicle range from $1,961.40 in Iowa to $2,498.25 in Minnesota, according to the DOT. A handful of other states have imposed similar fees in recent years, though none of them among Wisconsin’s neighbors.

“At first blush, this 2.5 percent looks pretty steep,” said Chris Snyder, general counsel for the Wisconsin Automobile and Truck Dealers Association. “We fear it would have a chilling effect on the sale of new cars.”

DOT’s 2015-17 budget request calls for more than $750 million in new fees and taxes, including at minimum a 5-cent-per-gallon increase in the tax paid on gasoline and a 10-cent-per-gallon increase on diesel fuel tax. The current gas tax of 31 cents per gallon would fall to 13.5 cents per gallon, but a new 8 percent sales tax on gas with a minimum threshold would increase the net tax to 36 cents per gallon.

The proposal is part of a patchwork of departmental budget requests that Gov. Scott Walker will review in crafting his own biennial budget proposal, due out in early 2015. Secretary Mark Gottlieb has said the transportation budget faces a $680 million shortfall in the coming budget cycle. Walker has said he opposes raising the gas tax, but during the recent campaign he floated the idea of creating a new sales tax on motor fuel to replace the gas tax, which is consistent with Gottlieb’s proposal.

The proposal includes the new vehicle tax and gas taxes, as well as a $50 increase in the annual registration fee for fuel-efficient hybrid or electric vehicles. That means while regular gas vehicle owners would continue to pay a $75 annual fee, the nearly 48,000 hybrid and electric vehicle owners in the state would pay $125. The number of such vehicles is up more than tenfold from 2005.

Some environmentalists reacted strongly to the proposed increase in annual registration fees on hybrid/electric vehicles, which five other states — Washington, Colorado, Nebraska, Virginia and North Carolina — have passed. Virginia lawmakers voted to repeal its $64 fee on hybrid vehicles earlier this year amid an uproar from drivers.

“The proposed fee discourages innovation and punishes consumers who are trying to do the right thing by investing in cars and trucks that benefit everyone by cleaning up our air, reducing greenhouse gases, and reducing Wisconsin’s dependence on oil,” said Shahla Werner, director of the local chapter of the Sierra Club.

Steve Hiniker, executive director of 1000 Friends of Wisconsin, was less critical of the additional charge for hybrids, noting higher fuel efficiency is one of the many reasons there is a projected multibillion-dollar shortfall in the transportation fund over the next decade.

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“There is a sound policy basis for saying, ‘You guys impact the road just as much as the other, we need to recoup our cost,’” he said.

But Hiniker still had broader concerns with the proposal, saying it doesn’t do enough to rein in spending on major highway projects. He called it “a very suburban-oriented transportation budget.”

Craig Thompson, executive director of the Transportation Development Association of Wisconsin, praised the proposal for addressing looming transportation funding problems now.

“It ensures communities around the state won’t be left out in the cold while we fix our Interstate system,” he said.

Todd Berry, president of the Wisconsin Taxpayers Alliance, said one of his concerns is the proposal “has a lot of elements and gets very complex and hard for the public to follow.”

“Part of me wonders on the tax side why there’s so much twisting and turning and hoop-jumping to generate the money, when the cleanest way might be to recognize that we already have a gas tax,” Berry said. “When things lose transparency, in the long run the public gets nervous and thinks you’re being a little too cute.”

The state previously indexed its gas tax to inflation, but discontinued that in 2006. The Legislature hasn’t voted to increase the gas tax since 1997.

Mike Mikalsen, a spokesman for Sen.-elect Stephen Nass, R-Whitewater, said Nass had “significant concerns.” 

“It’s their starting point, it’s not his,” Mikalsen said of the DOT’s proposal, adding that, like any agency budget request, the governor will likely make major changes to it.

The Associated Press contributed to this report. Contact reporter Matthew DeFour at mdefour@madison.com or 608-252-6144. Contact reporter Mary Spicuzza at mspicuzza@madison.com or 608-252-6122.

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Contact Mary Spicuzza at mscpicuzza@madison.com or 608-252-6122. Contact Matthew DeFour at mdefour@madison.com or 608-252-6144.